Is a housing shortage the least of our worries?

So, the “National Jobs & Skills Summit” succeeded in what seemed a predetermined outcome: to lift migrant numbers and boost our population once again. Permanent migration will be lifted to 195,000 per annum, to address “skilled labour shortages” that are “holding back the economy.”

Set aside that full employment would ordinarily see real wages grow (a much needed outcome of ‘supply and demand 101’ – and something that hasn’t happened for a long time), the acceleration of migration and population growth will have consequences. One of those is the question of housing, with a number of industry groups and ‘think tanks’ like The Grattan Institute arguing for measures to rapidly increase the supply of housing. Their preference is to overturn community objection to high and medium density housing, which they claim is restricted by local governments “to appease local residents concerned about road congestion, parking problems, and damage to neighbourhood character.” I mean, how dare residents object to congestion, parking and damage to the character of their neighbourhoods. Bloody peasants! (Incredibly, the Grattan Institute went on to say: “The people who might live in new housing – were it to be built – don’t get a say.” Which means that people who don’t live in a neighbourhood don’t get a say… but that they should? This dear reader is what passes for a think tank these days).

A housing shortage though is only one of the challenges. Most of the additional “skilled” migrant intake will settle in major cities, where congestion problems are mounting. Our skilled migrants (with a wage floor below the average wage) will not be flashy suit-wearing financial markets or property executives, catching shiny new public transport projects to their high-rise CBD towers from which they can view and rule over the world beneath them. No, they will be “nurses, teachers, aged care and childcare, hospitality, IT and other skilled workers (who) are holding the economy back”.  These workers and the industries they work in are suburban, which means getting to and from work with any semblance of convenience, will involve the private car. For every 100,000 extra people, expect 60,000 to 70,000 more cars on the roads. And given the lower wage profile of our skilled migrant intake, they won’t be driving $65,000+ Teslas, much to the dismay of wealthy inner urban Teals and Greens. No, they are more likely to be driving early model, emissions heavy vehicles – because that’s what they need and can afford.

Another shortage which is hard to ignore is health care. Barely a night passes without another news story dealing with chronic shortages in our health system. Admittedly, some of these shortages are labour related (which skilled migrants will help address) but others are physical – we haven’t been building hospitals in pace with population. This scary graph below from the World Bank suggests that today we have around one third the number of total beds (private and public) per thousand as we had up until maybe the mid 1980s. (What happened in 1999-2000?). Other sources paint a similar picture. Our lower income earning skilled migrants aren’t exactly going to be rushing for a $400+ a month private health cover policy, so you can safely bet a majority will – initially at least – be reliant on an already stretched public system.

Schools too may come under pressure. The public education system has served Australia well but with all major cities now embracing greater population density within existing urban footprints, we will need to find more places for more children in existing areas. Private or independent schools – for the same reason as private health insurance – are likely beyond reach of new migrants on lower incomes. I tried to summarise the challenge in A looming schools shortage?: “Every extra million people (as for example predicted for each of our major capitals in just a few short years) will mean an extra 160,000 students. At a rough average school size of 400 students, that’s another 400 additional schools for each million of extra population.” Finding land suitable for new schools will not be easy.  Happily, teacher-student ratios appear to have held up. The real growth in numbers seems to be administration and related roles (doesn’t that say something) but the pressure of rising demand for student places will surely exert itself soon.

Other more basic services will also be put under pressure. Australia’s energy grid is cracking, with falling baseload generation not yet being met by the promise of renewables. The Australian Energy Market Operator (AEMO) is warning that: “Electricity supplies are forecast to fall short of demand within three years across Australia's eastern grid, unless new renewable energy and transmission capacity is urgently brought online… Central to the upheaval has also been a spate of coal-fired plant outages, which at one stage in June affected a quarter of the fleet in the eastern states. AEMO said those supply pressures were likely to get worse in the coming years as five coal plants closed, taking with them 14 per cent of the National Energy Market's total capacity.”

An increase in skilled migration of course won’t be the reason the energy grid could run short of energy, but it is another reflection of policy-induced supply shortages (much like housing) which are now translating into higher and higher prices (much like housing).

Even one of the most basic commodities of an advanced nation – reliable drinking water – seems threatened with shortages. In fast growing south east Queensland, water utility organisations in 2021 warned in an official report that: “South-east Queensland will not have enough drinking water to support its rapidly growing population amid fears the region’s dams will struggle to supply millions of extra residents.” Building new water storages seems too politically charged, and governments can be divided on the best course of action. For many of our major cities, offshore desalination plants seem the fallback position. If only they weren’t so energy-hungry and could drain what’s left of the power grid. What, you want people to have reliable electricity AND reliable water?

It’s easy to be sarcastic. If only it weren’t true. I am one of those who believes our nation can readily support more people. In many respects, we need more people. But we are proving ourselves increasingly hopeless at it. This is just a cursory scan of some areas where our limited capabilities are becoming obvious. There are arguably many more. Pumping up the population intake at a time of critical housing, energy, hospital and even water shortages, without widely agreed plans to address those shortages, and without a coherent national settlement strategy and instead just jamming more people into already challenged and congested major cities, doesn’t seem like planning to me.

Maybe they need to hold another summit to think about it? They could open it with a reading of what author Donald Horne so acerbically once said? “Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people's ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”